Ask Me Help Desk - Buying a new house or renting one

Buying a new house or renting one

I'm very young but I'm starting work very soon and going to earn a load of money so I want to know if I should get a house or rent a flat for me and my girlfriend . I can afford to buy a house but I think I'm to young and renting a flat could save mega money but my girlfriend sais I should buy a house please help me.

If you live with her long enough she gets half of it just like you were married. Same with your savings. Something to keep in mind.

Look at buying a house like an investment. Rent keeps going up and its money you will never get back, you are buying someone else their house in effect. Buy a house, it will usually appreciate in value, and while the interest you will never see back, beyond tax credits... the value of the house you will get back plus any appreciated value when you sell.

Also if you plan to stay in the area is important. It makes no sense to buy if you plan on leaving in a few years. But if you plan to stay it does.

Buying the correct house, is a good investment, esp if you are going to stay for years and years in the same area.

So a lot will depend on what "tons of money is" and the other is that often renting is often not that much more than buying, depending on the investments

When you are young, you need to ask yourself what is the likelihood that you will stay at the job you have. If you will be changing, maybe even moving far far away, don't buy. If you do decide to buy, buy ONLY a move in ready house in excellent condition, in an appreciating area, but also one that is not high priced for that neighborhood. Real estate people have stats on all that.

I'm not sure what smoothy means by your girlfriend getting half as if you were married. Even so, no matter how lovey dovey you two are, sit down and put all financial agreements with her in writing, and keep monthly accounting for as long as you own a house. If she doesn't have an equally high paying job, DO NOT put her on the deed, or she can stop paying a dime, and even force the sale, or prevent the sale if you change jobs.... the list of horrors is a long one. I bought my first house with my bf and another friend and it couldn't have been smoother, even when we bought out the friend, and even when I was bought out by my ex. But I saw it go all wrong with other people.

Also, if you will be making a lot of money, you will really need the mortgage interest deduction.

I have always preferred owning to renting, no matter how broke I was.

Up until the housing collapse of 10 years ago, a house was an excellent investment. To give you an example. I bought my first house in the late 70s. I sold it 10 years later for 4x what I paid for it. I then bought a new house and 30 years later its still worth double what I paid for it.

But, as Joy indicated, you have to gauge how long you will be in your current job/area. Also how much you can put down on the house. You say you can afford to buy, but are you considering that from a monthly cost or from a down payment.

The two main advantages of owning are building equity and tax savings. You get a deduction for property taxes and for mortgage interest. But you need to look at the total cost of ownership (which includes property taxes, mortgage interest, insurance and upkeep). Renting generally includes only your rental costs and renters insurance (which is cheap).

Interest on a mortgage is front loaded. So your payments start with more going to interest then principle. That's one of the main reasons you need to look at how long you may be in your job and how long you will stay in the area. You don't really start building much equity until after the first 5 years.

Another point is you need to look at what your girlfriend will be putting into this. If she is putting nothing, she could stand to have a share of the house if you break up.

You are never too young to own a house, but being young does bring in factors that need to be considered.

What are your finances like NOW? Seem obvious you rent and see how this new job goes and where this girlfriend fits in your life.

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She doesn't even know you don't want a future with her, and is obviously planning to stay with you and build a nest.

Should get a house or rent a flat for me and my girlfriend". Is this the same one you wanted to break up with?

Quote:

Originally Posted by ma0641

Should get a house or rent a flat for me and my girlfriend". Is this the same one you wanted to break up with?

Yes I wanted to but we talked about it and we are good and I'm staying with her . She sais she is going to change , lets hope so

Quote:

Originally Posted by ScottGem

Up until the housing collapse of 10 years ago, a house was an excellent investment. To give you an example. I bought my first house in the late 70s. I sold it 10 years later for 4x what I paid for it. I then bought a new house and 30 years later its still worth double what I paid for it.

But, as Joy indicated, you have to gauge how long you will be in your current job/area. Also how much you can put down on the house. You say you can afford to buy, but are you considering that from a monthly cost or from a down payment.

The two main advantages of owning are building equity and tax savings. You get a deduction for property taxes and for mortgage interest. But you need to look at the total cost of ownership (which includes property taxes, mortgage interest, insurance and upkeep). Renting generally includes only your rental costs and renters insurance (which is cheap).

Interest on a mortgage is front loaded. So your payments start with more going to interest then principle. That's one of the main reasons you need to look at how long you may be in your job and how long you will stay in the area. You don't really start building much equity until after the first 5 years.

Another point is you need to look at what your girlfriend will be putting into this. If she is putting nothing, she could stand to have a share of the house if you break up.

You are never too young to own a house, but being young does bring in factors that need to be considered.

Thanks , the town I'm moving to is really small and houses are really cheap there so I think it's a good deal. Like R400000 or $36000 .

My post was referring to the US housing market. If you are not in the US your experiences may vary. I'm guessing you aren't by your use of R400000.

Quote:

Originally Posted by ScottGem

My post was referring to the US housing market. If you are not in the US your experiences may vary. I'm guessing you aren't by your use of R400000.

Yeah I'm in south africa

Quote:

Originally Posted by The 20year old

Yes I wanted to but we talked about it and we are good and I'm staying with her . She sais she is going to change , lets hope so

I hope you do not purchase a house unless you can afford it on your own. Based on your previous posts about your relationship with the girlfriend, I would be wary of incurring debt until you are sure "she is going to change".